Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Emirates's Rapid Expansion  
User currently offlineFL370 From United States of America, joined Apr 2006, 252 posts, RR: 0
Posted (8 years 7 months 3 days 19 hours ago) and read 6615 times:

why is it that Emirates is always buying airplanes. where does all the money come from. i mean they order around 80 777s, maybe 100 7e7/a350. i mean thats a lot of money.

40 replies: All unread, showing first 25:
 
User currently offlineTwoLz2Rn From United States of America, joined Oct 2005, 452 posts, RR: 0
Reply 1, posted (8 years 7 months 3 days 19 hours ago) and read 6615 times:

1. oil
2. tourism

...don't forget they bought 40 something A380's


User currently offlineScorpio From Belgium, joined Oct 2001, 5044 posts, RR: 44
Reply 2, posted (8 years 7 months 3 days 16 hours ago) and read 6455 times:

Quoting TwoLz2Rn (Reply 1):
1. oil

No.


User currently offlineRichardPrice From , joined Dec 1969, posts, RR:
Reply 3, posted (8 years 7 months 3 days 16 hours ago) and read 6430 times:

Financing, a good business plan, and being owned by one of the wealthiest people in the world.

User currently offlineAirCop From , joined Dec 1969, posts, RR:
Reply 4, posted (8 years 7 months 3 days 16 hours ago) and read 6417 times:

Quoting Scorpio (Reply 2):
No.

 checkmark 

Emirates is owned by the Government of Dubai which is part of the UAE. Dubai is the regional trading center for the region, much like New York City, London, therefore its a major money center.


User currently offlineTwoLz2Rn From United States of America, joined Oct 2005, 452 posts, RR: 0
Reply 5, posted (8 years 7 months 3 days 16 hours ago) and read 6369 times:

oil has jump started their expansion...it won't sustain it

User currently offlineAntskip From Australia, joined Jan 2006, 936 posts, RR: 6
Reply 6, posted (8 years 7 months 3 days 15 hours ago) and read 6332 times:

Quoting FL370 (Thread starter):
why is it that Emirates is always buying airplanes. where does all the money come from. i mean they order around 80 777s, maybe 100 7e7/a350. i mean thats a lot of money.

Your question was discussed at length on this forum only a few days ago:
Emirates Airline Profit Rises 5.8% To US$674M (by Singapore_Air Apr 26 2006 in Civil Aviation).
Eha gave a link to a helpful article:
Emirates Airline Profit Rises 5.8% To US$674M (by Singapore_Air Apr 26 2006 in Civil Aviation).
WK773 referred to the latest and comprehensive EK annual reports:
http://www.ekgroup.com/Annualreports/2005-2006/Default.html.
EK are buying a lot of aeroplanes to satisfy the needs of an expanding network. They can buy them because they can afford them due to the success of their existing network - a well-managed operation with a different model to most existing airlines.


User currently offlineScorpio From Belgium, joined Oct 2001, 5044 posts, RR: 44
Reply 7, posted (8 years 7 months 3 days 14 hours ago) and read 6255 times:

Quoting TwoLz2Rn (Reply 5):
oil has jump started their expansion...

You do realise that Dubai is not exactly swimming in oil, don't you?


User currently offlineTwoLz2Rn From United States of America, joined Oct 2005, 452 posts, RR: 0
Reply 8, posted (8 years 7 months 3 days 14 hours ago) and read 6220 times:

i've been there...oil JUMP STARTED their expansion, not funding it. With out the oil, Dubai/EK probably would not have come to what it is now...

User currently offlineNYCFlyer From United States of America, joined Jan 2005, 1388 posts, RR: 9
Reply 9, posted (8 years 7 months 3 days 13 hours ago) and read 6164 times:

Oil is relevant in that the greater Gulf economy is largely fueled by oil, even if Dubai per se does not have any. In a globalized world, and with Dubai as a regional financial center, oil very much matters to Dubai.

However, top three advantages that EK has over the competition.

1) Dubai forbids labor unions
2) Dubai has no, or negligible, corporate tax
3) The group (I forget the name) that owns EK also runs DXB. Therefore, this group has outlawed LCCs at DXB. LCCs are only at Sharjah.

Heck, if UA had no labor unions, no taxes, and no LCC competition on any of their routes, they'd probably be in a position to order 70 777's as well...


User currently offlineTwoLz2Rn From United States of America, joined Oct 2005, 452 posts, RR: 0
Reply 10, posted (8 years 7 months 3 days 13 hours ago) and read 6137 times:

Quote:
The group (I forget the name) that owns EK also runs DXB

I think it is called The Emirates Group or DNATA

[Edited 2006-05-01 02:27:53]

User currently offlineZkpilot From New Zealand, joined Mar 2006, 4846 posts, RR: 9
Reply 11, posted (8 years 7 months 3 days 13 hours ago) and read 6099 times:

Quoting NYCFlyer (Reply 9):
However, top three advantages that EK has over the competition.

1) Dubai forbids labor unions
2) Dubai has no, or negligible, corporate tax
3) The group (I forget the name) that owns EK also runs DXB. Therefore, this group has outlawed LCCs at DXB. LCCs are only at Sharjah.

Heck, if UA had no labor unions, no taxes, and no LCC competition on any of their routes, they'd probably be in a position to order 70 777's as well...

there are successful airlines with unions.... Southwest for example....
the tax issue is the big one... makes a big difference to profits... in EK's case about US$500 million a year difference.
Not too sure about the 3rd one... Dubai has open skies, they had this when EK was just starting, nobody took EK seriously and EK basically secured landing rights in just about every country on earth thats worth anything for free for the next 20 years whilst all other airlines are paying for rights etc. Smart move, but they were started directly/indirectly by oil money.



56 types. 38 countries. 24 airlines.
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 12, posted (8 years 7 months 3 days 12 hours ago) and read 6083 times:

Quoting NYCFlyer (Reply 9):
Heck, if UA had no labor unions, no taxes, and no LCC competition on any of their routes, they'd probably be in a position to order 70 777's as well...

but they do have open skies policy..if QF wanted to, they could can eliminate Australia and setup shop at DXB where they would have the same "advantages"......

UA has rights to LHR and to a certain extent, other cities also......

at the end of the day, EK has great services, including inflight F/A's...courteous, always helping, and a nice attitude (that doesn't cost any money)....can't say that about my trips on UA however... spin 

as a matter of fact, I've flown UA ORD-LHR/CDG a few times and then connect with EK to DXB.....given I've experienced both UA's and EK's services "back-to-back"....I couldn't say too much about UA's "friendly" service..

in fact, I can say it flat out sucked  yuck 



"Up the Irons!"
User currently offlineUnited Airline From Hong Kong, joined Jan 2001, 9191 posts, RR: 15
Reply 13, posted (8 years 7 months 3 days 12 hours ago) and read 6074 times:

Dubai has oil and it is an oil exporter. But not as much as Abu Dhabi

User currently offlineZkpilot From New Zealand, joined Mar 2006, 4846 posts, RR: 9
Reply 14, posted (8 years 7 months 3 days 12 hours ago) and read 6040 times:

Quoting Jacobin777 (Reply 12):
but they do have open skies policy..if QF wanted to, they could can eliminate Australia and setup shop at DXB where they would have the same "advantages"......

thats incorrect.... if QF set up in DXB they would have to set it up as a DXB based airline ie have 50% owned by DXB, otherwise they would not be able to fly to other countries apart from the ones that QF already has agreements with. Open skies isn't as open as it sounds... you still have to have agreements in place at the other end. Also I doubt QF would enjoy all of the same tax breaks etc that EK does.



56 types. 38 countries. 24 airlines.
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 15, posted (8 years 7 months 3 days 12 hours ago) and read 6011 times:

Quoting Zkpilot (Reply 14):
thats incorrect.... if QF set up in DXB they would have to set it up as a DXB based airline ie have 50% owned by DXB, otherwise they would not be able to fly to other countries apart from the ones that QF already has agreements with. Open skies isn't as open as it sounds... you still have to have agreements in place at the other end. Also I doubt QF would enjoy all of the same tax breaks etc that EK does.

correct, my bad, I should have put a "silly" icon next to it as that what my intention was...

here it is... Silly

but my other comments are not..they were serious...there isn't a comparison in service between UA and EK, even given the fact EK's service has gone down the past few years....



"Up the Irons!"
User currently offlineAirFrnt From United States of America, joined Jul 2004, 2827 posts, RR: 42
Reply 16, posted (8 years 7 months 3 days 11 hours ago) and read 5978 times:

Quoting Scorpio (Reply 2):
No.

Yes. As much as EK apologists don't want to admit it, EK benefits from the entire huge influx of cash that the rest of the middle east (save Iraq and Isreal) benefit from. They might not get it directly (although they certainly have cheaper and easier access to Jet A then US carriers) but the vast majority of their local customers are funded by oil.

The day oil stops in the middle east is the day EK has to find a rational scale.

Quoting NYCFlyer (Reply 9):
1) Dubai forbids labor unions
2) Dubai has no, or negligible, corporate tax
3) The group (I forget the name) that owns EK also runs DXB. Therefore, this group has outlawed LCCs at DXB. LCCs are only at Sharjah.

2 is a major issue. It makes the theoreticaly kickbacks to Boeing and EADS look like penies. The government of Dubai can only do this while they are swimming in money from oil.

And yes, sooner or later the oil in the middle east will go away.


User currently offlineCXA330300 From South Africa, joined May 2004, 1568 posts, RR: 2
Reply 17, posted (8 years 7 months 3 days 11 hours ago) and read 5950 times:

Isn't this sort of fast expansion what kills airlines? People Express comes to mind.


The sky is the limit as long as you can stay there
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 18, posted (8 years 7 months 3 days 11 hours ago) and read 5950 times:

Quoting AirFrnt (Reply 16):
Yes. As much as EK apologists don't want to admit it, EK benefits from the entire huge influx of cash that the rest of the middle east (save Iraq and Isreal) benefit from. They might not get it directly (although they certainly have cheaper and easier access to Jet A then US carriers) but the vast majority of their local customers are funded by oil.

who are these "local customers" as you put it? The United Kingdom? The United States? Germany? Ireland? Scotland? France? Nigeria? South Africa? Japan? India? Pakistan?

Every one of these places I've mentioned has seen EK up its flight from nothing to 2-3-5 dailies within a few years......that's just called "good business"....

their books are audited by Price Waterhouse and CooperS...neither them, nor other financial analysts have found any inconsistencies in their books

maybe people can't accept the fact EK has good service... no 

their fares aren't too cheap either.... its not as if EK gets some kind of advantage then passes it on to the customer........people like to fly on EK, it's as simple as that...



"Up the Irons!"
User currently offlineEKGOLD From Australia, joined May 2005, 207 posts, RR: 6
Reply 19, posted (8 years 7 months 3 days 8 hours ago) and read 5814 times:

Quoting AirFrnt (Reply 16):
And yes, sooner or later the oil in the middle east will go away.

Dubai maybe but the rest of the Gulf, not in our life time... Abu Dhabi alone has something in the order of 100 years proven reserves at current production...

This topic has been discussed ad nauseum and pops up every month.

Yes, they are Government owned,
No they do not receive direct Subisides or pay income tax. The again, how many airlines around the world actually pay tax at the moment given earnings... Just remember tax is an after profit calculation.
Yes Dubai has Oil and had its current economic prosperity built on the back of it,
No they dont have the huge reserves that the likes of Abu Dhabi, Saudi, Iran, Qatar (Gas), Iraq, Algeria, Nigeria has.
Yes they get the flow on benefits of the petro dollar boom and economic benefits that exist in the region. So is Etihad, Qatar Airways. Why does Richard Branson feel the need to bring a plane to Dubai? All major European carriers also have multiple flights to Dubai a day. They are also jumping on the petro dollar fuelled boom.
No they do not get free fuel in Dubai.
Yes their operating costs are similar to other major airlines, especially fuel as a percentage of costs.
Yes Dubai is a traditional trading hub of the region and its original wealth came from the pearling industry and trading,
Yes Dubai has grown on the back of that history into modern day trading . Tourism, financial and commodity exchanges being the latest in a long history of trading.
Yes Dubai has become a very attractive tourist and convention destination for 9 months of the year. the other 3 months of the summer being incredibly hot, but over the last couple of years, dubai still records incredible occupancy rates for that summer period.
Yes, Dubai sits in the middle of Europe, Asia, Africa and roughly 75% of the worlds population and probably the fastest growing area in terms of aviation growth. Look at India and China alone. Dubai can now link this entire market and soon the Americas, in most cases with a one stop service. It is almost pefectly located for intercontinental hub operations.
Yes EK have a huge order book of planes.
No, they are not all arriving tomorrow hence allowing growth in cash flows to fund the financing when they do arrive
Yes they are financing these through traditional means.
No they dont go to Sheikh Mohammed and ask him to write a cheque everytime a new aircraft is delivered.
Yes their business model works on brand new equipment, thereby slashes MX costs.
Yes they have access to a huge and cost effective labour resource
Yes they get economies of scale when negotiating large orders.
Yes, whilst under no obligation to do so as they are not a Public Entity, they publish independantly audited financial statements.
Yes their product places them in the top category of airlines around the world and is a very marketable product.
Yes they sell/market their product well.

I hope you find some answers above to your original question... There will be the usual negative sentiment as well, but ce la vie....


User currently offlineLehpron From United States of America, joined Jul 2001, 7028 posts, RR: 21
Reply 20, posted (8 years 7 months 3 days 7 hours ago) and read 5756 times:

Quoting FL370 (Thread starter):
why is it that Emirates is always buying airplanes. where does all the money come from. i mean they order around 80 777s, maybe 100 7e7/a350. i mean thats a lot of money.

When orders are worth some dollar/euro amount, that's it. It's worth that amount, they didn't pay for it yet. I doubt they would pay all up front. Most of their orders will not even fly let alone get built for a LONG time.

Similarly, I wonder how do so many automobiles get sold every year -- it's called financing. Most people cannot drop tens of thousands just like that. I do not think an airline that orders in the billions has that much sitting around somewhere. It's earned over time and maybe the frames are paid per delivery? Someone correct me on that part.



The meaning of life is curiosity; we were put on this planet to explore opportunities.
User currently offlineSATX From United States of America, joined Apr 2005, 2840 posts, RR: 7
Reply 21, posted (8 years 7 months 3 days 7 hours ago) and read 5735 times:

Quoting Jacobin777 (Reply 18):

their books are audited by Price Waterhouse and CooperS...neither them, nor other financial analysts have found any inconsistencies in their books

That means less than many people think. I've been through audits, it's nothing but bullshit IMO. You can pass an audit with cooked books. Most companies I worked for cooked the books, both public and private. Even Enron was given a clean bill of health for Pete's sake.



Open Season on Consumer Protections is Just Around the Corner...
User currently offlineAndesSMF From , joined Dec 1969, posts, RR:
Reply 22, posted (8 years 7 months 3 days 7 hours ago) and read 5720 times:

"Dubai is distinct from other members of the UAE in that revenues from oil account for only 6% of its gross domestic product. A majority of the emirate's revenues are from the Jebel Ali Free Zone (JAFZ) [2] and now, increasingly, from tourism."

"...over 80% of Dubai�s population consists of expatriatesnon-citizens. This has led to massive importation of low-wage workers, especially from India and Pakistan."

The hidden possible problem is that Dubai is using up a lot of money and labor to diversify their economy. This brings a lot of low and high paid workers to Dubai. But what happens when these workers leave? Will the tourist then make up for the lost revenues? I think this is Dubai's gamble, and it might pay off.


User currently offlinePavlin From , joined Dec 1969, posts, RR:
Reply 23, posted (8 years 7 months 3 days 4 hours ago) and read 5340 times:

Quoting AndesSMF (Reply 22):
"Dubai is distinct from other members of the UAE in that revenues from oil account for only 6% of its gross domestic product. A majority of the emirate's revenues are from the Jebel Ali Free Zone (JAFZ) [2] and now, increasingly, from tourism."

http://www.cia.gov/cia/publications/factbook/geos/ae.html#Econ
check this link

Around 46% procent export is OIL. (2.5 million barels a day) and 100BIL barels reserve.

But anyway less than half amount of budget, that is till good compared to other gulf states.


User currently offlineZKNEA From New Zealand, joined Dec 2005, 151 posts, RR: 1
Reply 24, posted (8 years 7 months 3 days 4 hours ago) and read 5258 times:

Quoting Zkpilot (Reply 14):
50% owned by DXB,

I doubt it would have to be own 50% by a UAE national if they set up in one of the Free Zones. (I could be wrong, but by simple definition I doubt they would have to).

Quoting EKGOLD (Reply 19):
I hope you find some answers above to your original question... There will be the usual negative sentiment as well, but ce la vie....

Well put.

Quoting AndesSMF (Reply 22):
But what happens when these workers leave?

Most wouldn't. Despite all the doom and gloom portrayed about Dubai's labour law, most of the labourers (note 'most') have it better off than back in their home countries. The amount of overstayers and people trying to enter the boarders illegally is phenomenal.


25 Post contains links and images Planetime : Dubai last time I check is part of the UAE. For all of the people who says Dubai economy has nothing to do with oil now please give it a rest. This i
26 EK156 : The only LCC that is not allowed to operate out of Dubai is Air Arabia. While alot of other LCC airlines already operate out of Dubai. Don't forget t
27 Pavlin : But anyway even if they get backup from oil hedging, they are still a good airline. And will stay good in the future if it doesn't collapse under her
28 AirFrnt : You know... their hub is DXB... That might mean that their local customers live around DXB. In America, companies are taxed independently. DL may not
29 Zbrox : PLEASE read some of the previous replies. More than 90% of all this is in the emirate of Abu Dhabi. The distinction between the different emirates is
30 NYCFlyer : What LCC's in DXB are you referring to? I didn't know there were any, so please correct me.
31 EK156 : Al Jazeera of Kuwait Air India Express The New LCC from Saudi Arabia called Sama will soon fly to Dubai That is 3 that I know off!!! Also when Mena J
32 Zbrox : Sorry. Typo in my last post, missed editing. Abu Dhabi ruling family is named Al Nayhan. No "M". My bad.
33 ZKNEA : Likewise, PLEASE read my posts. As far as I am aware I wrote no such thing.
34 JAL : I'm amaze at the rate of expansion at Emirates!!!!!
35 JFK998 : AirBlue (Pakistan) also. Right?
36 Post contains images Jacobin777 : As well as Aero Asia (Pakistan)
37 Zbrox : Right. You didn't. Pavlin did. But for some reason the quote had your name to it... Must have clicked under instead of above post... Sorry.
38 Post contains images ZKNEA : Suppose I can forgive you
39 Pavlin : Click on the link and read it Zbrox
40 Zbrox : I read it. It refers to the UAE. The WHOLE of UAE. Dubai is one of seven very independent "states" in the UAE. As have been told before more than 90%
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
LCC Rapid Expansion Go Wrong? posted Wed May 10 2006 14:46:56 by Britannia191A
CO Rapid Expansion Downright Dangerous! posted Wed Oct 13 2004 01:11:25 by Jfklganyc
Rapid Expansion Of Persian Gulf Airlines posted Thu Dec 11 2003 22:53:13 by CitationX
Emirates Worldwide Expansion Announced posted Thu Nov 27 2003 07:07:07 by Behramjee
ATA, Rapid Expansion? posted Tue Oct 28 2003 16:53:39 by Flying_727
Rapid Expansion 4 Regional/Secondary Euro Airpts? posted Thu Feb 21 2002 23:27:28 by EGGD
Emirates Expansion Plans posted Sun Feb 26 2006 22:15:56 by Iloveboeing
Emirates Expansion In North America - Timeframe? posted Tue Nov 16 2004 16:31:40 by Jsnww81
Emirates Plans Big New Zealand Expansion posted Mon May 3 2004 00:58:19 by 777ER
Emirates Expansion In UK? posted Thu Nov 13 2003 21:41:28 by EGFFbmi